407. Telegram From the Consulate General in British Guiana to the
Department of State1

Georgetown, April 11, 1965, 4:00 p.m.

376. Following is course of developments over past 36 hours in Burnham–D'Aguiar budget crisis since our tel 375 London 2012
which indicated grave threat to continued coalition. This threat now
appears to have been brought under control and impasse resolved after
intensive pressure by ConGen.

During mayor's reception evening April 9 for newly appointed BG commissioner to UK, Lionel Luckoo,
Minister of Works and Hydraulics Kassim (UF) told me that at cabinet meeting scheduled that evening
it was anticipated that decision would be made for D'Aguiar to leave cabinet. Kassim did
not know whether other UF ministers would
remain but thought they would. This meeting apparently went far into
night but without real results. D'Aguiar did not attend but other UF ministers did with his permission.

On morning April 10 at briefing on rice problem by Dr. Efferson
(Dean of School of
Agriculture, Louisiana State University) in Burnham's office which was attended by Kassim, Minister
of Trade and Industry Kendall, Minister of Agriculture JOHN, and by
myself and other US representatives,
message was received about one hour later from Burnham summoning key ministers to
special meeting at his residence. On way out I urged Kendall, whose
political judgment Burnham
respects, to see that if D'Aguiar
had to go that it be done smoothly on grounds personal and health
reasons, preferably with commendatory letter of appreciation from
Burnham, but sought impress
on Kendall importance of retrieving situation if at all possible. I also
spoke with Kassim, who seemed uncertain and depressed. Gave him same
advice along with view that D'Aguiar's departure from government would be damaging
but departure of UFs would be disastrous
and consequently every effort must be made to retain D'Aguiar's services.

Toward midnight April 10 I learned [less than 1 line of
source text not declassified] that UF executive had held meeting at which D'Aguiar claimed matter of principle
and substance was involved on which he felt strongly: that party's
choices were: (1) for him to resign with other UF ministers remaining; (2) for all UF ministers to resign; and (3) for all UF members to resign from legislative
assembly. After lengthy discussions executive voted for all ministers
(3) to resign and to defer question of leaving assembly (7 members)
until constitutional aspects could be determined. Report also indicated
that D'Aguiar scheduled meet with
Burnham at 9 a.m. April 11
for final session.

Immediately sought reach Burnham
without success. Called D'Aguiar
early morning April 11. He was just arising so invited him to breakfast.
[less than 1 line of source text not
declassified] Decided try combination of flattery, pleading,
and strong language related to horrible consequences of breakdown
anti-Jagan forces. Told
D'Aguiar how much US entities appreciated his contributions to
Burnham administration, what
favorable impact his presence in government had on various visitors,
e.g., that American businessmen usually say after seeing ministers that
they are good but D'Aguiar is
really outstanding. (D'Aguiar
usually does make better impression than any other minister on
businessmen.) Told him one of main reasons for USG support and confidence in BG was coalition and constructive role D'Aguiar was playing; everyone knew he
was outstanding member of cabinet and counting on him; that Washington
would not be able believe that on issue of abolition of property tax
worth about $1 million he would hand BG
to Jagan on a silver platter;
that I had just been to Washington and had given optimistic appraisal
stability Burnham
administration, and USG on basis such
reports had gone to extraordinary lengths to expedite aid and to make it
substantial; that because of this stability and his presence in cabinet
potential foreign investors were being encouraged; that I could not
believe that after all effort put into saving BG from communism, including strenuous efforts by D'Aguiar (all those miles and all those
speeches), it was going to be thrown away. I stressed it would be bad
enough if he felt he must leave government but to permit UF to leave was to sell his country out;
that with all trouble spots Secretary and senior officers had to cope
with, such as Vietnam, Russians, Castro, Chinese, were we now going to have to add BG to the list? I asked him to think about
consequences in BG itself which would
doubtless see return to violence, possibly against his own
supporters.

Then suggested that there must be compromise and that he must realize
Burnham could not give way
totally under ultimatum of resignation. Burnham must save face and D'Aguiar must give at least little bit. I asked if he
would accept idea of moratorium if I could obtain Burnham's agreement, or some kind of
depletion allowance which [Page 905]would
permit government to collect property taxes with one hand and refund it
with the other. We discussed matter and arrived at compromise whereby
existing industries could deduct cost of any expansion or capital
improvements from taxes owed or, if company did not qualify in this way,
purchase of government debentures would be regarded same as paying tax.
New industries would be exempt from tax. (First $50,000 is not taxable
in any event under existing legislation.) At my insistence he also
reluctantly authorized moratorium of two years but only as last resort
if Burnham rejected above.

At this point, with D'Aguiar's
concurrence, I informed Burnham
that 9 a.m. meeting with D'Aguiar
postponed if agreeable and I would meet with Burnham first. He agreed. D'Aguiar said he also wished have
Burnham's agreement to
downward revision of income tax rates and to simplifying tax structure
by decimal system. This tax now ranges from 6 percent on first $1,000 to
70 percent on $13,200 and above. Total cost of D'Aguiar's plan would be about $125,000
BWI. He was prepared not to inaugurate it until 1966 but wished make
some allusion to possibility in budget message scheduled April 14.

Finally, D'Aguiar confided other
matters which have been bothering him in coalition, some of which are
petty annoyances which probably loom much larger than otherwise in view
his fatigue: there were too many long cabinet meetings at night with
important matters decided at late hours; lack of expeditious handling of
agenda items, inadequate air conditioning, and belief that no one but he
felt free to be critical. I offered to talk to Burnham about reducing number of night
sessions or possibly exempting D'Aguiar in some fashion, as well as proposing more
personal consultation with D'Aguiar. D'Aguiar thought it would be good idea have committee
with each side represented on party basis to express freely to the other
any matters of concern. I did not commit myself to support this idea as
I am not certain that it would be productive.

D'Aguiar throughout whole first
part of discussion, kept reiterating desire to resign, but by end of
discussion had specifically agreed to stay indefinitely and to give it
another try.

I saw Burnham immediately
afterward and informed him of likelihood UF ministers resigning, possibility of UF leaving legislative assembly and recalled
series of serious consequences previously drawn to his attention. Told
him it seemed essential to keep D'Aguiar in government at least at this stage and to
settle this tax issue at any cost. Told him Washington had been given
favorable view of stability his administration during my recent visit,
that USG would find collapse of
coalition over tax involving $1 million incomprehensible, that if events
should take this disastrous turn, I had little doubt USG would have to reevaluate its aid
program since there would be little point in improving country for
Jagan. I then described
compromise which [Page 906]D'Aguiar was now willing to
accept on tax issue and Burnham
readily accepted it, even claiming he had proposed most of it to
D'Aguiar yesterday. (This may
be more face-saving.) Told Burnham that more than just taxes was involved here:
D'Aguiar was tired, unsure he
was really wanted or appreciated, and Burnham should pat him on the back occasionally. I
outlined D'Aguiar's complaints
and suggested Burnham find ways
to ameliorate them. I suggested he call D'Aguiar in at least once each week and talk over
important matters personally, making clear that D'Aguiar was not just another minister.
In short, that although Burnham
might find it distasteful, he should turn on some of his charm.

In order not to risk agreement coming apart in Burnham–D'Aguiar meeting, I suggested that no meeting be held
but that either Burnham or I
simply inform D'Aguiar of
Burnham's concurrence with
tax compromise. Burnham agreed
and telephoned D'Aguiar, who said
he wished to see Burnham anyway
“to thrash out a few things.” Burnham then asked me to remain during this session.
D'Aguiar made notes on all
major tax changes in new budget, asking Burnham in each case to agree. Burnham was considerate, readily
agreed, although offering occasional language changes. Burnham exempted D'Aguiar from cabinet meeting evening
April 11 or any meeting April 12 to free him to work on budget. He
agreed to try operate cabinet meetings more expeditiously, to consider
farming out items to subcommittees, to have better air conditioning in
cabinet room, and to have more personal consultation. D'Aguiar suggested periodical special
committee meeting on party basis in which criticism would be freely
offered on any subject without thought of offense. Burnham agreed but suggested it be
limited to cabinet officers and parliamentary secretaries. D'Aguiar agreed and read back all of
his notes. By this time three hours had passed and Burnham invited us sample his
bar.3

In telegram 375 from Georgetown, April 9,
Carlson reported his talk
with D'Aguiar earlier that
day about the latter's intention to resign. D'Aguiar told Carlson he had “no political
future,” the PNC intended to merge
with or swallow up his party, and that, therefore, he would direct
all his efforts towards doing a “good job as finance minister.”
D'Aguiar thought that
since “there is no hope in hell of balancing the budget” due to
PNC politically inspired
spending increases, that the only hope for the country was “in
providing image which will attract private investment” through a
good budget, “especially by abolition property tax.” (Ibid.)↩

In an April 12 memorandum to
Cobb, Shullaw reported that he sent the
following message to Carlson:
“Heartiest congratulations your efforts.” (Department of State,
INR/IL Historical Files,
British Guiana Chronological File (Burdett), 1965)↩